They want what is known as an Investor State Dispute Settlement Mechanism. They want it in order to allow them to drag Australia and other sovereign governments before specially constituted international courts.

Dave O'Neil accuse Julia Gillard and Tony Abbott of giving up on fairness in I see rich people.

Ross Gittins criticises the announcement of more funding for all schools in Productivity the loser in Gonski fight. He suggests that we could improve worker productivity by directing the extra funding to those who need it most.

David Gonski and his committee proposed increased funding of $5 billion a year for schools - government or non-government - according to their numbers of low-income, indigenous, disabled, non-English speaking or remote-area students.

According to the calculations of Trevor Cobbold, of the public-school Save Our Schools lobby group, Gillard's promise of extra funding for independent schools regardless of educational need could cost a further $1.5 billion a year.

See what happened? Successful lobbying by the independent schools ensured that, however much extra ends up being spent on federal grants to schools, more will go to privileged students who don't need it and less to underprivileged students who do.

Should Tony Abbott win the federal election, it's likely little or nothing extra will be spent on increasing resources for the education of the underprivileged. And that will be a lost opportunity to improve the future productivity of Australia's workforce.

Friday, 17 August 2012

Jessica Irvine has a book out: Zombies, Bananas and Why There Are No Economists in Heaven. The Sydney Morning Herald has published an edited extract: A noble pursuit by any measure. Basically, economics looks for the most efficient way to allocate scarce resources. Have a read, it is a great and entertaining primer to an understanding of the point of the "dismal science".

In Carbon Taxes Cut Debt, Cool Planet the Editors of Bloomburg are calling for a carbon tax:

Absent some profound shift in our penchant for burning coal, oil and gas, the Earth is expected to warm as much as 11.5 degrees Fahrenheit over the next 100 years, causing more weather-related destruction.

It’s only responsible to force a shift away from fossil fuels by enacting a carbon tax. The U.S., which accounts for about 19 percent of global emissions today, should take the lead in doing so as part of broader tax reform.

The benefits of such a tax are clear: It would raise immediate revenue for a strapped nation, curtail the use of fossil fuels and, as a result, drastically lower emissions. A carbon tax of $15 a ton that rises at 4 percent above inflation annually would raise $310 billion by 2050 and cut emissions 34 percent (or 2.5 billion metric tons), according to a recent report by the Brookings Institution. The biggest hit would come from gas prices, which would initially rise by about 13 cents a gallon and increase gradually from there, according to other estimates.

To avoid one of the biggest downsides of a carbon tax -- slower economic growth -- as much as 50 percent of the revenue should be used to lower corporate tax rates for all companies. Such an offset could boost economic output by giving business a bigger incentive to invest and hire, research by Brookings and others shows. The remaining revenue should be used to help reduce the federal deficit and make the tax code more progressive, easing some of the bite from higher electricity and gas prices.

Psychologists Victoria Medvec and Thomas Gilovich of Cornell University, and Scott Madey of the University of Toledo think that this phenomenon can be explained by counterfactual thinking. This means that people compare their objective achievements to what “might have been.”

The most obvious counterfactual thought for the silver medalist might be to focus on almost winning gold. She would focus on the difference between coming in first place, and any other outcome. The bronze medalist, however, might focus their counterfactual thoughts downward towards fourth place. She would focus on almost not winning a medal at all. The categorical difference, between being a medalist and not winning a medal, does not exist for the comparison between first and second place.

It is because of this incongruous comparison that the bronze medalist, who is objectively worse off, would be more pleased with herself, and happier with her achievement, than the silver medalist.

Goldman then goes on to note a study of the Judo competition in the 2004 summer Olympics that had similar findings. However, I'm not sure that other factors don't come into play in sports like Judo. In Judo judoka have to win the bronze medal contest to claim the medal. So a bronze medalist has by definition just one their last bout. By contrast, the silver medalist has just lost their last bout. I'm sure that has an effect.

There is an idea in politics, especially American politics, that a good speech by a country's leader can help him achieve his goals. Ezra Klein, in The Unpersuaded, examines this proposition. Klien looks to the work of George Edwards who finds the opposite is actually the case.

This, Edwards says, is the reality facing modern Presidents, and one they would do well to accommodate. “In a rational world, strategies for governing should match the opportunities to be exploited,” he writes. “Barack Obama is only the latest in a long line of presidents who have not been able to transform the political landscape through their efforts at persuasion. When he succeeded in achieving major change, it was by mobilizing those predisposed to support him and driving legislation through Congress on a party-line vote.”

That’s easier said than done. We don’t have a system of government set up for Presidents to drive legislation through Congress. Rather, we have a system that was designed to encourage division between the branches but to resist the formation of political parties. The parties formed anyway, and they now use the branches to compete with one another. Add in minority protections like the filibuster, and you have a system in which the job of the President is to persuade an opposition party that has both the incentive and the power to resist him.

Jim Cooper says, “We’ve effectively lost our Congress and gained a parliament.” He adds, “At least a Prime Minister is empowered to get things done,” but “we have the extreme polarization of a parliament, with party-line voting, without the empowered Prime Minister.” And you can’t solve that with a speech.

Saturday, 11 August 2012

Ian McAuley at New Matilda has written Can We Be Any More Productive? It's an interesting look at labour productivity. He also explores the issue of industrial relations - in particular the need for a cooperative approach rather than the traditional adversarial approach.

the hypothetical future emergence of greater-than-human superintelligence through technological means. Since the capabilities of such intelligence would be difficult for an unaided human mind to comprehend, the occurrence of a technological singularity is seen as an intellectual event horizon, beyond which events cannot be predicted or understood.

The blog Cognitive Social Web has a post arguing that The Singularity is not coming. The post argues that a singularity requires an exponential rate of progress in science. In actual fact, according to the post, science advances in a linear fashion, not an exponential one. This happens because each area in science faces diminishing rates of return as their field progresses.

I would like to simply argue that scientific progress is in fact linear, and this despite the capitalization of past results into current research (“accelerating returns”), and despite an exponentially increasing population of scientists and engineers working on advancing it (resource explosion). And since I don’t want to argue in the realm of opinion, I am going to propose a simple, convincing mathematical model of the progress of science. Using the same model, I’ll point out that a hypothetical self-improving AI would actually see its own research progress and intelligence stagnate soon enough, rather than explode —unless we provide it with exponentially increasing computing resources, in which case it may do linear progress (or even better, given a fast enough exponential rate of resource increase).

Friday, 3 August 2012

16 year old Chinese swimmer Ye Shiwen swam a remarkable race to win gold in the 400m Individual Medley at the London 2012 Olympics. Afterwards doubt was cast on her performance by some in the media and within swimming circles.

I don't know if Ye has ever been involved in doping. However, while her performance is remarkable, it's also not inconsistent with that of other young swimmers who are drug free. Have a read of Don't be too quick to question Chinese success by Phil Lutton who documents other cases of young swimmers (Stephanie Rice) lowering their personal bests by significant amounts to break records. Lutton notes:

To the wider sporting world, Ye is only now becoming a notable name. Yet to swimming diehards, she has been one of the rising stars for some years, even if her surge of form in London has caught most people by surprise. Beisel and Rice had been the favourites for gold.

Ye won the 200m IM at the Asian Games in 2010 (2.09.37) and the 400m IM (4.33.79), all at age 14. At the time, she was listed at 160cm tall. Now, the official Olympic site lists her 12 cm loftier at 172cm. That sort of difference in height, length of stroke and size of hand leads to warp-speed improvement.

A swimming coach once told me that you can't swim faster than your height. In other words, the taller you are the faster you can swim (which is why there aren't any short swimmers winning medals amongst the men).

Lutton also writes:

If America - a nation of 300 million - can produced a Michael Phelps and Australia an Ian Thorpe, is it really so bizarre to think China - with a population of 1.3 billion and a state sporting program run with military precision - could have found his female equivalent?

Denis Cotterell, the former coach of Olympic gold medallist Grant Hackett, has trained Ye and other top Chinese swimmers.

He said he was "100 per cent certain" Ye was clean and said the questions over doping had been raised by people who do not understand the sport.

"You have to have a look at the improvements in Beijing," he told PM.

"If people do their homework and you have a look at some of the world records ... the margins that they have been dropped by some of the extremely talented swimmers that have applied themselves over the past – it is a combination of their talent and their work ethic."

Cotterell said Ye's five-second improvement to her personal best time was not a one-off.

"[There have] been great achievements by people in the sport, it's part of the history ... and talent comes along and makes a good drop and shocks a few people but we generally seem to have accepted it," he said.

"But for some reason in this case now, it's not, because of the Chinese [history]."

"Ian Thorpe, no one questioned, Michael Phelps, no one questioned. And having worked with the girl and seeing how hard she works and the talent she is, it is disappointing that the kid is in the media conference on her own with 100 journalists having to defend herself."

"I like to believe innocent until proven guilty. As far as I'm concerned I think she is an amazing swimmer and it's just amazing that I got to be as close as I was with how amazing she is," Coutts said.

"I have never been in that position myself, I have never been accused [of doping] but I'm sure it would be tough for the athlete knowing people are saying things like that about you. It wouldn't be a nice feeling. As I said, innocent until proven guilty. You can't speculate something about someone if you don't know."

So, why the criticism of Ye? I think partly it's because of the alleged doping by Chinese swimmers in the 1990s (guilt by association), partly because of her remarkable performance (a young Ian Thorpe also faced accusations), but mostly I think it's racism. If she had been American or Australian I very much doubt that such accusations would have been made (or at least not so publically).

Wednesday, 1 August 2012

In the fierce and sometimes ugly fight over global climate change, we finally have an answer coming from the earth itself: the weather is telling us climate change is here and we are causing it. This summer, there have been relentless - droughts, wildfires, melting glaciers and unprecedented storms – all happening at the same time. And around the world people are demanding something be done about it. Even in the United States, ground zero for climate change denial, six in ten Americans say they believe it is indeed happening. But political leaders are missing in action – cowed by a vociferous climate change denial club, which is actually now shrinking faster than the polar ice caps. Watch the video above to see theoretical physicist Michio Kaku explain just how the world is giving us signs that climate change is already happening.

Paul Krugman, in Money for Nothing, explains why Government debt and deficits are not currently a problem in the USA and why interest rates on that debt has gone down. He does on to write:

So what is going on? The main answer is that this is what happens when you have a “deleveraging shock,” in which everyone is trying to pay down debt at the same time. Household borrowing has plunged; businesses are sitting on cash because there’s no reason to expand capacity when the sales aren’t there; and the result is that investors are all dressed up with nowhere to go, or rather no place to put their money. So they’re buying government debt, even at very low returns, for lack of alternatives. Moreover, by making money available so cheaply, they are in effect begging governments to issue more debt.

And governments should be granting their wish, not obsessing over short-term deficits.

Obligatory caveat: yes, we have a long-run budget problem, and we should be taking steps to address that problem, mainly by reining in health care costs. But it’s simply crazy to be laying off schoolteachers and canceling infrastructure projects at a time when investors are offering zero- or negative-interest financing.

You don’t even have to make a Keynesian argument about jobs to see that. All you have to do is note that when money is cheap, that’s a good time to invest. And both education and infrastructure are investments in America’s future; we’ll eventually pay a large and completely gratuitous price for the way they’re being savaged.

That said, you should be a Keynesian, too. The experience of the past few years — above all, the spectacular failure of austerity policies in Europe — has been a dramatic demonstration of Keynes’s basic point: slashing spending in a depressed economy depresses that economy further.

I think it's worth emphasising Krugman's point that the USA needs to do something about their deficit, but not now. Right now they need to stimulate their economy, not depress it.